Help, I'm In Debt. What Can I Do?

Consumers today are simply overwhelmed by the financial straits in which many find themselves in these days and cannot make an informed decision. Many of you have had this experience. Panic sets in and you say, "Help I'm in debt. What can I do?" This is when you finally realize that you owe too much money to too many people and you may not be able to pay it all back. Assuming that you have found the strength to start solving your debt problems, what can be done?

In fact, there are many avenues for resolving an uncomfortable financial situation. How you proceed depends on the details.

Bar associations (attorney regulatory groups) in almost every state provide some great information to get you started. For example, good attorneys and debt counselors will tell you that, if you are in a serious debt situation, creditors and collection agencies can only contact you in the early stages. Eventually, these creditors must, by law, stop calling you on the telephone. From that point they will probably be contacting you by mail to let you know they are escalating the situation to include possible legal action. This means that they may try to recoup some of the losses through either a collection agency arrangement or through a court-mandated settlement.

Why is this important information? Because many times, people in debt will make quick emotional decisions that do not solve the problem at hand and which do not protect their own interests. These consumers often feel harassed and hurried by creditors and collection agencies to the point that they just want to end the phone calls and letters altogether, regardless of the consequences to their financial health. In reality though, this may be a good time to take a few deep breaths, talk with family or financial advisers you trust, and start using the tools of the debt system to work for you.

One of these tools that many people have neglected for years is the credit report. If you are in a situation that may require debt consolidation or debt management and counseling, it is imperative you have a full understanding of your credit history. Just knowing the facts contained on your credit report can be a great comfort when creditors and merchants start asking what you intend to do about your debt obligations. Credit reports are issued by credit-reporting agencies that get their information from your creditors. The reports are made available to other creditors, employers and landlords and to you upon request.

According to the California Bar Association, a "credit report includes such information as whether you pay your bills on time, have had a foreclosure, owe money as the result of a lawsuit or were convicted of a crime. Each piece of information stays in the report for a certain number of years. For example, a bankruptcy usually will be listed for 10 years."

You may also want to consider a debt consolidation loan. A consolidation loan may be the answer to lowering your monthly payments overall, but high interest rates and long term agreements may mean that you end up paying more in total than with current agreements. So you should probably enter into a consolidation loan agreement after much discussion and careful study. A debt counseling agency or debt management plan may be another option. If you shop carefully and work with one that makes you feel comfortable, a counselor or professional manager may be able to handle your debt stress with a good plan.

Perhaps the best advice you can get when you are in debt and need help is, "don't get in a hurry!" Experience has taught many of us that late-fees and back payments can be stopped when you undertake a serious debt management plan with a reputable counselor, manager or lender. Then, and only then, can you move forward with your life and "get out of debt" completely.